Expansion of State’s Affirmative Action Program May Be Problematic

In Connecticut, the state’s Commission on Human Rights and Opportunities administers an affirmative action program that has, until recently, only applied to state public works construction projects whose cost is greater than $50,000. Although the program has admirable goals, its implementation has been inconsistent. Part of the problem is the Commission’s inability to effectively administer the program. For example, effective January 1, 2015, the Commission instituted a “temporary policy” that allowed it to retain 2 percent retainage for a period of at least 120 days while the Commission “works diligently to eliminate of its backlog” of affirmative action plans requiring approval. Almost a year later, that temporary policy remains in effect despite its questionable validity.

Section 46a-68j-26 requires the Commission to review affirmative actions plans within 60 days of receipt; yet, it has failed to do so. As a result, by executive fiat, the Commission gave itself the right to retain a contractor’s funds while it takes more than twice the time allowed by its own regulations to perform its designated function. Moreover, if the Commission was experiencing a backlog at the beginning of the year, that problem must be getting worse. Effective October 1, 2015, the affirmative action requirements now apply to every “municipal public works contract or contract for a quasi-public agency.” Conn. Gen. Stat. § 46a-68d. Thus, contractors that are already working on tight margins in this tough economy can likely expect the arguably wrongful detention of their hard earned money to continue — potentially for even longer periods of time.

The program also creates economic hardships because of its subcontracting goals. Specifically, the Commission typically requires contractors to award a certain percentage of their work to certified minority business enterprises (MBE) and/or women business enterprises (WBE). While the vast majority of contractors are more than willing to give MBEs and WBEs every opportunity to succeed, practical realities make compliance with the Commission’s requirements impractical and, sometimes impossible, without the Commission willing to consider reasonable steps taken by contractors to be sufficient good faith efforts.

Many qualified companies do not become certified MBE or WBE entities because of the administrative effort required. However, the Commission only counts the contributions of certified MBEs or WBEs, and the failure of a contractor to achieve a MBE/WBE goal can have a detrimental impact upon a contractor who has made more than a sufficent faith effort to comply. In some instances, the Commission has required contractors to do more than give MBE and/or WBE companies an opportunity to submit bids. Instead, contractors are often expected to repeatedly follow-up with said companies to ensure that a sufficient number of MBE/WBE bids are submitted. Such a requirement imposes an unreasonable burden upon contractors in what already is a tough economic climate.

The difficulties associated with the issues described above are real but are often tolerated. However, the laws and regulations that govern the program must be appropriate, and the Supreme Court has given guidance as to what is and what is not an appropriate program. In light of the foregoing, there is recourse for contractors that are being treated unfairly.

If you find yourself have difficulty meeting the Commission’s requirements and/or are experiencing severe economic hardship as a result of the issues described herein, please give me a call.